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CONCURRENT AUDIT PROCEDURES AT ICICI BANK - RPC
A Project
submitted in partial fulfilment of the requirements
for
The award of the Degree of
MASTER OF BUSINESS ADMINISTRATION
BY
JAYANT MISHRA (MBA20072009)
DEPARTMENT OF MANAGEMENT
BIRLA INSTITUTE OF TECHNOLOGY MESRA
RANCHI
1
2009-11
DECLARATION CERTIFICATE
This is to certify that the work presented in the project entitled
ldquoCONCURRENT AUDIT PROCEDURES AT ICICI BANK - RPC rdquo in
partial fulfilment of the requirement for the award of Degree of Master of
Business Administration of Birla Institute of Technology Mesra Ranchi is
an authentic work carried out under my supervision and guidance
To the best of my knowledge the content of this project does
not form a basis for the award of any previous Degree to anyone else
(Guidersquos Name amp Signature )
Dept of Management
Birla Institute of Technology
Mesra ( Lalpur Extension Center )
2
Ranchi
CERTIFICATE OF APPROVAL
The foregoing project entitled ldquoCONCURRENT AUDIT PROCEDURES AT
ICICI BANK - RPCrdquo is hereby approved as a creditable study of research
topic and has been presented in a satisfactory manner to warrant its
acceptance as prerequisite to the degree for which it has been submitted
It is understood that by this approval the undersigned do not necessarily
endorse any conclusion drawn or opinion expressed therein but approve
the thesis for the purpose for which it is submitted
(Internal Examiner) (External Examiner)
3
A C K N O W L E D G E M E N T
The pleasure and the satisfaction of the completion of our summer internship project would be impossible without the support and the guidance of few who spared there valuable time for us apart from their regular schedules They have been the source of inspiration towards the progress of our project
Profound sense of gratitude is due to Mr DAYASHANKAR CA PARTNER DINESH K YADAV amp ASSOCIATES who helped us to clarify my thoughts amp guided me to conduct the training in the right direction
I am also thankful to Mr RAKESH KUMAR Concurrent Auditor amp Mr UTTAM KUMAR Head ICICI BANK ndash RPC Jamshedpur who provided us with all the required information on the concurrent audit procedures
Special thanks to our project guide Mr Avinash Sinha for guiding me amp giving me valuable advice This project has been made possible through direct or indirect cooperation of various persons for whom I wish to express my appreciation amp gratitude
JAYANT MISHRA
(MBA200709)
4
OBJECTIVESOF THESTUDY
5
OBJECTIVES OF THE STUDY
To collect information regarding back office operational activities with special reference to savings account only
To know how to face the problem of corporate world
To face original banking situations regarding audit and to gain real accounting experience
To enhance the knowledge and skills by working in Chartered firm
To apply the theoretical knowledge in corporate sector
To face the problem of corporate world and tackle them in polite way
To know about facilities provided by ICICI Bank
To fully understand the fundamentals of banking operations
To understand the proper functioning of RPC
To understand different aspects of concurrent audit
6
RESEARCHMETHODOLOGY
7
M E T H O D O L O G Y
Research is common refers to search for knowledge It is the pursuit of truth with the help of study observation composition and experiment
Research methodology is a systematic way to solve the research problems
It helps in studying the various steps that are adopted by the researcher to study the research problems along with the logic behind the It describe mail what must be done how will be done What data will be needed and how the data will be analyzed
SAMPLE SIZE
Sample size 100 from each type of AOFs
Source of data only secondary data used
Secondary data AOFs Samples Bank Records and through internet
DESCRIPTIVE RESEARCH
Descriptive research includes surveys and fact-finding enquires of different kinds The major
purpose of descriptive research of the state of affairs as it exists at present In social science and
business research we quite often use the term Ex post facto research for descriptive research
studies
8
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
2009-11
DECLARATION CERTIFICATE
This is to certify that the work presented in the project entitled
ldquoCONCURRENT AUDIT PROCEDURES AT ICICI BANK - RPC rdquo in
partial fulfilment of the requirement for the award of Degree of Master of
Business Administration of Birla Institute of Technology Mesra Ranchi is
an authentic work carried out under my supervision and guidance
To the best of my knowledge the content of this project does
not form a basis for the award of any previous Degree to anyone else
(Guidersquos Name amp Signature )
Dept of Management
Birla Institute of Technology
Mesra ( Lalpur Extension Center )
2
Ranchi
CERTIFICATE OF APPROVAL
The foregoing project entitled ldquoCONCURRENT AUDIT PROCEDURES AT
ICICI BANK - RPCrdquo is hereby approved as a creditable study of research
topic and has been presented in a satisfactory manner to warrant its
acceptance as prerequisite to the degree for which it has been submitted
It is understood that by this approval the undersigned do not necessarily
endorse any conclusion drawn or opinion expressed therein but approve
the thesis for the purpose for which it is submitted
(Internal Examiner) (External Examiner)
3
A C K N O W L E D G E M E N T
The pleasure and the satisfaction of the completion of our summer internship project would be impossible without the support and the guidance of few who spared there valuable time for us apart from their regular schedules They have been the source of inspiration towards the progress of our project
Profound sense of gratitude is due to Mr DAYASHANKAR CA PARTNER DINESH K YADAV amp ASSOCIATES who helped us to clarify my thoughts amp guided me to conduct the training in the right direction
I am also thankful to Mr RAKESH KUMAR Concurrent Auditor amp Mr UTTAM KUMAR Head ICICI BANK ndash RPC Jamshedpur who provided us with all the required information on the concurrent audit procedures
Special thanks to our project guide Mr Avinash Sinha for guiding me amp giving me valuable advice This project has been made possible through direct or indirect cooperation of various persons for whom I wish to express my appreciation amp gratitude
JAYANT MISHRA
(MBA200709)
4
OBJECTIVESOF THESTUDY
5
OBJECTIVES OF THE STUDY
To collect information regarding back office operational activities with special reference to savings account only
To know how to face the problem of corporate world
To face original banking situations regarding audit and to gain real accounting experience
To enhance the knowledge and skills by working in Chartered firm
To apply the theoretical knowledge in corporate sector
To face the problem of corporate world and tackle them in polite way
To know about facilities provided by ICICI Bank
To fully understand the fundamentals of banking operations
To understand the proper functioning of RPC
To understand different aspects of concurrent audit
6
RESEARCHMETHODOLOGY
7
M E T H O D O L O G Y
Research is common refers to search for knowledge It is the pursuit of truth with the help of study observation composition and experiment
Research methodology is a systematic way to solve the research problems
It helps in studying the various steps that are adopted by the researcher to study the research problems along with the logic behind the It describe mail what must be done how will be done What data will be needed and how the data will be analyzed
SAMPLE SIZE
Sample size 100 from each type of AOFs
Source of data only secondary data used
Secondary data AOFs Samples Bank Records and through internet
DESCRIPTIVE RESEARCH
Descriptive research includes surveys and fact-finding enquires of different kinds The major
purpose of descriptive research of the state of affairs as it exists at present In social science and
business research we quite often use the term Ex post facto research for descriptive research
studies
8
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Ranchi
CERTIFICATE OF APPROVAL
The foregoing project entitled ldquoCONCURRENT AUDIT PROCEDURES AT
ICICI BANK - RPCrdquo is hereby approved as a creditable study of research
topic and has been presented in a satisfactory manner to warrant its
acceptance as prerequisite to the degree for which it has been submitted
It is understood that by this approval the undersigned do not necessarily
endorse any conclusion drawn or opinion expressed therein but approve
the thesis for the purpose for which it is submitted
(Internal Examiner) (External Examiner)
3
A C K N O W L E D G E M E N T
The pleasure and the satisfaction of the completion of our summer internship project would be impossible without the support and the guidance of few who spared there valuable time for us apart from their regular schedules They have been the source of inspiration towards the progress of our project
Profound sense of gratitude is due to Mr DAYASHANKAR CA PARTNER DINESH K YADAV amp ASSOCIATES who helped us to clarify my thoughts amp guided me to conduct the training in the right direction
I am also thankful to Mr RAKESH KUMAR Concurrent Auditor amp Mr UTTAM KUMAR Head ICICI BANK ndash RPC Jamshedpur who provided us with all the required information on the concurrent audit procedures
Special thanks to our project guide Mr Avinash Sinha for guiding me amp giving me valuable advice This project has been made possible through direct or indirect cooperation of various persons for whom I wish to express my appreciation amp gratitude
JAYANT MISHRA
(MBA200709)
4
OBJECTIVESOF THESTUDY
5
OBJECTIVES OF THE STUDY
To collect information regarding back office operational activities with special reference to savings account only
To know how to face the problem of corporate world
To face original banking situations regarding audit and to gain real accounting experience
To enhance the knowledge and skills by working in Chartered firm
To apply the theoretical knowledge in corporate sector
To face the problem of corporate world and tackle them in polite way
To know about facilities provided by ICICI Bank
To fully understand the fundamentals of banking operations
To understand the proper functioning of RPC
To understand different aspects of concurrent audit
6
RESEARCHMETHODOLOGY
7
M E T H O D O L O G Y
Research is common refers to search for knowledge It is the pursuit of truth with the help of study observation composition and experiment
Research methodology is a systematic way to solve the research problems
It helps in studying the various steps that are adopted by the researcher to study the research problems along with the logic behind the It describe mail what must be done how will be done What data will be needed and how the data will be analyzed
SAMPLE SIZE
Sample size 100 from each type of AOFs
Source of data only secondary data used
Secondary data AOFs Samples Bank Records and through internet
DESCRIPTIVE RESEARCH
Descriptive research includes surveys and fact-finding enquires of different kinds The major
purpose of descriptive research of the state of affairs as it exists at present In social science and
business research we quite often use the term Ex post facto research for descriptive research
studies
8
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
A C K N O W L E D G E M E N T
The pleasure and the satisfaction of the completion of our summer internship project would be impossible without the support and the guidance of few who spared there valuable time for us apart from their regular schedules They have been the source of inspiration towards the progress of our project
Profound sense of gratitude is due to Mr DAYASHANKAR CA PARTNER DINESH K YADAV amp ASSOCIATES who helped us to clarify my thoughts amp guided me to conduct the training in the right direction
I am also thankful to Mr RAKESH KUMAR Concurrent Auditor amp Mr UTTAM KUMAR Head ICICI BANK ndash RPC Jamshedpur who provided us with all the required information on the concurrent audit procedures
Special thanks to our project guide Mr Avinash Sinha for guiding me amp giving me valuable advice This project has been made possible through direct or indirect cooperation of various persons for whom I wish to express my appreciation amp gratitude
JAYANT MISHRA
(MBA200709)
4
OBJECTIVESOF THESTUDY
5
OBJECTIVES OF THE STUDY
To collect information regarding back office operational activities with special reference to savings account only
To know how to face the problem of corporate world
To face original banking situations regarding audit and to gain real accounting experience
To enhance the knowledge and skills by working in Chartered firm
To apply the theoretical knowledge in corporate sector
To face the problem of corporate world and tackle them in polite way
To know about facilities provided by ICICI Bank
To fully understand the fundamentals of banking operations
To understand the proper functioning of RPC
To understand different aspects of concurrent audit
6
RESEARCHMETHODOLOGY
7
M E T H O D O L O G Y
Research is common refers to search for knowledge It is the pursuit of truth with the help of study observation composition and experiment
Research methodology is a systematic way to solve the research problems
It helps in studying the various steps that are adopted by the researcher to study the research problems along with the logic behind the It describe mail what must be done how will be done What data will be needed and how the data will be analyzed
SAMPLE SIZE
Sample size 100 from each type of AOFs
Source of data only secondary data used
Secondary data AOFs Samples Bank Records and through internet
DESCRIPTIVE RESEARCH
Descriptive research includes surveys and fact-finding enquires of different kinds The major
purpose of descriptive research of the state of affairs as it exists at present In social science and
business research we quite often use the term Ex post facto research for descriptive research
studies
8
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
OBJECTIVESOF THESTUDY
5
OBJECTIVES OF THE STUDY
To collect information regarding back office operational activities with special reference to savings account only
To know how to face the problem of corporate world
To face original banking situations regarding audit and to gain real accounting experience
To enhance the knowledge and skills by working in Chartered firm
To apply the theoretical knowledge in corporate sector
To face the problem of corporate world and tackle them in polite way
To know about facilities provided by ICICI Bank
To fully understand the fundamentals of banking operations
To understand the proper functioning of RPC
To understand different aspects of concurrent audit
6
RESEARCHMETHODOLOGY
7
M E T H O D O L O G Y
Research is common refers to search for knowledge It is the pursuit of truth with the help of study observation composition and experiment
Research methodology is a systematic way to solve the research problems
It helps in studying the various steps that are adopted by the researcher to study the research problems along with the logic behind the It describe mail what must be done how will be done What data will be needed and how the data will be analyzed
SAMPLE SIZE
Sample size 100 from each type of AOFs
Source of data only secondary data used
Secondary data AOFs Samples Bank Records and through internet
DESCRIPTIVE RESEARCH
Descriptive research includes surveys and fact-finding enquires of different kinds The major
purpose of descriptive research of the state of affairs as it exists at present In social science and
business research we quite often use the term Ex post facto research for descriptive research
studies
8
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
OBJECTIVES OF THE STUDY
To collect information regarding back office operational activities with special reference to savings account only
To know how to face the problem of corporate world
To face original banking situations regarding audit and to gain real accounting experience
To enhance the knowledge and skills by working in Chartered firm
To apply the theoretical knowledge in corporate sector
To face the problem of corporate world and tackle them in polite way
To know about facilities provided by ICICI Bank
To fully understand the fundamentals of banking operations
To understand the proper functioning of RPC
To understand different aspects of concurrent audit
6
RESEARCHMETHODOLOGY
7
M E T H O D O L O G Y
Research is common refers to search for knowledge It is the pursuit of truth with the help of study observation composition and experiment
Research methodology is a systematic way to solve the research problems
It helps in studying the various steps that are adopted by the researcher to study the research problems along with the logic behind the It describe mail what must be done how will be done What data will be needed and how the data will be analyzed
SAMPLE SIZE
Sample size 100 from each type of AOFs
Source of data only secondary data used
Secondary data AOFs Samples Bank Records and through internet
DESCRIPTIVE RESEARCH
Descriptive research includes surveys and fact-finding enquires of different kinds The major
purpose of descriptive research of the state of affairs as it exists at present In social science and
business research we quite often use the term Ex post facto research for descriptive research
studies
8
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
RESEARCHMETHODOLOGY
7
M E T H O D O L O G Y
Research is common refers to search for knowledge It is the pursuit of truth with the help of study observation composition and experiment
Research methodology is a systematic way to solve the research problems
It helps in studying the various steps that are adopted by the researcher to study the research problems along with the logic behind the It describe mail what must be done how will be done What data will be needed and how the data will be analyzed
SAMPLE SIZE
Sample size 100 from each type of AOFs
Source of data only secondary data used
Secondary data AOFs Samples Bank Records and through internet
DESCRIPTIVE RESEARCH
Descriptive research includes surveys and fact-finding enquires of different kinds The major
purpose of descriptive research of the state of affairs as it exists at present In social science and
business research we quite often use the term Ex post facto research for descriptive research
studies
8
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
M E T H O D O L O G Y
Research is common refers to search for knowledge It is the pursuit of truth with the help of study observation composition and experiment
Research methodology is a systematic way to solve the research problems
It helps in studying the various steps that are adopted by the researcher to study the research problems along with the logic behind the It describe mail what must be done how will be done What data will be needed and how the data will be analyzed
SAMPLE SIZE
Sample size 100 from each type of AOFs
Source of data only secondary data used
Secondary data AOFs Samples Bank Records and through internet
DESCRIPTIVE RESEARCH
Descriptive research includes surveys and fact-finding enquires of different kinds The major
purpose of descriptive research of the state of affairs as it exists at present In social science and
business research we quite often use the term Ex post facto research for descriptive research
studies
8
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
SAMPLING PROCEDURE
This refers to the procedure by which the respondents should be chosen In order to
obtain a representative sample a probability sample of the population was drawn Probability
sampling can be of the following types
- Simple random sample
- Stratified random sample
- Cluster (area) sample
In this case Stratified random sampling was done
9
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
TABLE OF CONTENTS
CONTENTS PAGE NO
Introduction to the Industry 11
a Banking
b Concurrent Audit
Company Profile 40
a ICICI Bank
b Dinesh K Yadav amp Associates
Data Analysis amp Interpretation 46
Results and Findings 50
Conclusion 52
Recommendations 54
Limitation of the Study 56
References 58
10
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
INTRODUCTIONTO THE
INDUSTRY
11
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
A INTRODUCTION TO BANKING
In the past ie before the introduction of money there was a barter system When the Money came into vogue its use was limited to buying and selling activities only Growth of economy consequent upon development in the fields like communication science transportation has necessitated the increase in the usage of money With the growth of money the use of credit instruments also increased The origin of Banks can be traced the money lenders who used to lend money for business purpose and also used to accept the deposits from friends relatives and others in a limited sense The growth in the fields like trade commerce industry science and technology has accelerated the growth of banking sector Today the Banking industry has become a part and parcel of the Economic system and we today cannot imagine economy or growth in the economy without Banks
MEANING AND DEFINITION OF BANK AND BANKERS
The word Bank associated with the Institution dealing in money raised from the public In other words Banks is an institution which borrows money from public in the form of deposits and creates credit by lending it to the needy According to Kinley ldquoA Bank is an establishment which makes to individuals such advances of money as may be required and safely made on to which individuals entrust money when not required by them for userdquo Normally a Bank receives deposits from the public and supplies credit to manufacturers businessmen agriculturists artisans and other productive purposes for
the economic groeth of the country In the words of Hart ldquoA Banker is one who in the ordinary course of his business receives money which he repays by honoring cheques of persons from whom or on whose account he receives itrdquo According to World Bank Encyclopedia ldquoBank is a business establishment that safeguards peoplersquos money and uses it to make loans and investments According to Cowther Banker is ldquoa dealer in debt of his own and other peoplersquos
12
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
HISTORY OF BANKING IN INDIA
Though the history of banking in India can be traced back to the activities of money lenders Banking as institution acquired its importance during the British rule Governmentrsquos action in popularizing the word lsquosocial bankingrsquo and subsequent nationalization of 14 commercial banks in 1969 and subsequently 6 more commercial banks has led to rapid growth of banking industry in India with the Government directionssupport and RBI directives
All the nationalized commercial banks are now considered as public sector banks They are owned managed and controlled by the public authority Profits earned by the public sector banks will be a source of income for Govt of India In other words the Banks contribute to the Exchequer of the Government The profits thus contributed by the banks will be used to promote social welfare and this is how the word banking has transformed as social banking in the Indian context The first bank in India though traditional was established in 1786 From then till today the Indian Banking System can be segregated into three different period as under
PERIOD I ( 1786 to 1969) The History of the Banking sector in India goes back to the period of setting up of The General Bank of India in the year 1786The Bank of Hindustan and Bengal subsequently In 1920 three banks established by the East India Company namely (i) Bank of Bengal (ii) Bank of Bombay and (iii) Bank of Madras were amalgamated and the Ban k called Imperial Bank of India was started with private European share holders
During this period the banks experienced periodic failures as there were approximately 1100 small banks and as they were small in size they could not cope up with the requirements of growing needs of the industry The failure of banks created suspicion in the minds of public and the public started loosing confidence in the Banking system which was in primitive stage As an aftermath the deposit mobilization was slow Then the Government of India came up with the Banking Regulation Act
1949Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority
13
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
PERIOD II ( 1969 to 1991) The Government of India took most important steps for improvement of banking sector especially after independence As a first step the Govt of India formed State Bank of India in 1955 by nationalizing the Imperial Bank of India with extensive banking facilities and as the principal agent of RBI At places where there are no offices of RBI State Bank of India will act as agent of RBI State Bank of India functions as commercial bank in India Subsidiary banks of State Bank of India were fully nationalized in 1969) It may not be out of place if we mention here that the late Prime Minister Indira Gandhi was the mentor of the present well established Banking Sector Nationalization of Banking has led to rapid growth of banking in India by way of branch expansion covering large chunk of population under banking After the nationalization the growth in deposit has increased by 800and in advances by a massive 11000 The nationalization and subsequent growth of Banking Industry has made the Indian public gain confidence in the Banking Industry and the Banking industry has become inevitable for overall growth of the economy
PERIOD III (From 1991 till now) After the introduction of Narasimhan Committee recommendations in the year 1991 the Banking industry is flooded with many new products like telebanking mobile banking ATM facility electronic fund transfer ndash both inter bank and intrabank anywhere banking facility Recently with the introduction of Core Banking facility has completely changed the banking concept With the introduction of Core banking facility a customer of one branch can transact with that branch through any other branch of that particular Bank In other words the customer of particular branch has become the customer of the Bank itself
14
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
15
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Banking set-up in India Banks in India can be classified as under
ORGANIZED BANKING SECTOR UNORGANIZED BANKING SECTOR
Reserve bank of India(Central bank in India)
State Bank of India and subsidiaries of State bank of India
Nationalized Commercial Bank
Other Commercial Banks
Branches of Foreign Banks
Co-operative banking institutions
Regional rural banks
Post Office saving bank
Indigenous Bankers ndashmoney lenders pawn brokers etc
The banks in India are being separated in diverse groups Each group has their own benefits and limitations in operating in India Each has their own dedicated target market Few of them only work in rural sector while others in both rural as well as urban Many are only catering in cities Some are of Indian origin and some are foreign players
16
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
On the basis of ownership the Banks in India can be classified as under
Public Sector Banks
Private Sector Banks
Cooperative Banks
Regional Rural Banks
|Foreign Banks in India
The commercial banking structure in India consists of
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Commercial Banks in India
Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India (RBI) Act 1934
Unscheduled Banks in India
Non-scheduled bank in India means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act 1949 which is not a scheduled bank The last decade has witnessed the maturity of Indias financial markets Since 1991 Government of India took major steps in reforming the financial sector of the country Lot of changes has taken place in fields like financial markets banking system non-banking finance companies capital market and mutual funds etc The financial system of India has shown a great deal of buoyancy The Indian economy has survived from crises while economies of other countries have suffered or collapsed due to their incapability to withstand the jolt or shock caused by internal or external factors The flexible exchange rate regime increasing foreign exchange reserves etc have made the Indian Economy very strong
17
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Public Sector Banks
Foreign Banks in India Urban
Co-Operative banks Banks
State Co-Operative Banks
Private Sector Banks
Regional Rural Banks
Nationalized Banks
New Private Banks
Old Private Banks
Scheduled Commercial Banks Scheduled Co-Operative Banks
Scheduled Banks
SCHEDULED PATTERN OF COMMERCIAL BANKS IN INDIA
18
State Bank of India amp its Associates
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
BANKING INDUSTRY IN INDIA
In India the first joint stock bank was the Bank of Hindustan established in 1770 In 1881 came the Oudh Commercial Bank as a purely Indian joint stock bank followed by the Punjab National Bank in 1894 The East India company established three presidency banks in Calcutta Bombay and Madras These banks were amalgamated in 1921 into a single bank called the Imperial Bank of India It served as a Governmentrsquos bank till the arrival of a Central Bank namely Reserve Bank of India in 1935 RBI was nationalized in 1949 Banking Act in India were passed in 1946 and in 1949
The year of 1949 was a watershed in the banking history of India 14 major Commercial Banks were nationalized on 19th July 1969 There was denationalization on 10th February 1970 by the order of Supreme Court based on writ petition filed after a prolonged hearing challenging the validity of the act But on 14th February 1970 a new Ordinance was promulgated to remove loopholes in earlier Act and to renationalize 14 major Indian commercial banks namely
Central Bank of India
Punjab National Bank
United Bank of India
Bank of Baroda
United Commercial Bank
Canara Bank
Dena Bank
Syndicate Bank
Union Bank of India
Allahabad Bank
Indian Bank
Bank of Maharastra
Indian Overseas Bank
19
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Bank of India
After first phase of nationalization again on 15th April 1980 six more banks were nationalized They are ndash
Andhra Bank
Corporation Bank
New Bank of India
Orienal Bank of Commerce
Punjab and Sindh Bank
Vijaya Bank
PROSPECTS OF THE INDUSTRY
All the banks are forced to struggle to retain their identify and maintain the growth process in the changed scenario marked with the following features
Deployment of the additional funds available consequent to the reduction in Statutory Reserve Requirement in a profitable manner
Servicing of increased external funds mobilizedreceived to meet the prescribed norms of Risk Assets Ratio (CRAR)
High volume of non performing assets creating an adverse impact on the return on advances
Market determined interest rates investing in low yield on Government securities instead of extending the loan portfolio
Enhanced competition with the entry of new private sector banks Rejuvenated public sector banks re-emerging at the market place with their
inherent strength to claim their market share
Liberalization and de-regulation process started in 1991-92 has made a sea change in the banking system From a totally regulated environment the Indian banking has gradually moved into a market driven competitive system
20
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
The concept of universal banking is gaining momentum on the strength of increased coverage of activities between developing Financial Institutions and banks
The traditional banking functions would give way to a system geared to meet all financial needs of the customers We could see emergence of highly varied financial products which are tailored to meet specific needs of the customer in the retail as well as corporate segments Retail lending will receive greater focus Banks would compete with one another to provide full range of financial services to this segment
Mergers and acquisitions would gather momentum as managements will strive to meet the expectations of stakeholders
Corporate governance in banks and financial institutions would assume greater importance in the coming years
A major challenge in improving organizational effectiveness of banks lies in strengthening their capabilities of risk management RBI has advised the banks to implement the system of Asset Liability Management in accordance with its guidelines It involves quantification of risk and conscious decision making with regards to asset liability structure in order to maximize interest earning within the frame work of perceived risk
Human resource development would be another key factor defining the characteristics of a successful banking institution Employing and retaining skilled workers and specialists retraining the existing workforce and promoting a culture of continuous learning would be a challenge for the banking institution
21
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
BEVOLUTION OF CONCURRENT AUDIT IN BANK S
Introduction
Though a system of concurrent already in existence in large and exceptionally large bank branches it was formally introduced by the Reserve Bank of India vide its circular of October 1993 This measure of the Reserve Bank of India arose out of the recommendations of the Ghosh Committee on Frauds and Malpractices in Banks In its said circular the banking regulator explained concurrent audit as being ldquoan examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent personrdquo The primary objective if the introduction of a formal system of concurrent audits in banks was to ldquoserve as an administrative support to branches help in The RBI circular also clarifies that concurrent audit is essentially a management processThe importance of concurrent audit was highlighted by the banking regulator as being essential for
bull Sound internal accounting functions
bull Effective controls
bull Setting the tone for vigilance internal audit to preclude incidence of serious errors and fraudulent manipulations
The regulator however made it amply clear that the concurrent auditor would not sit on the judgment of the decisions taken by the branch manager or an authorized official Subsequently a working group was set up by RBI under the Chairmanship of Shri Jilani (the then Chairman Punjab National Bank) for reviewing the working of
concurrent audit system in banks and giving its recommendations for improving it Further some of the Public Sector Banks had also sought additional guidelines on the scope of the system coverage reporting procedures remuneration payable to Concurrent Auditor etc Accordingly RBI in consultation with Audit Sub-Committee of the Board for Financial Supervision revised the guidelines vide its circular dated 14th August 1996 RBI issued another circular on 12th August 1997 in connection with Concurrent Audit System ndash Foreign Exchange Transactions - Enlargement of scope
22
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
The objectives of concurrent audit thus can be enumerated below -
1048707 To supplement efforts of the Bank in carrying out simultaneous internal checks of transactions and compliance with the systems and procedures of the Bank
1048707 To perform substantive checking in key areas and rectification of deficiencies in the earliest possible period to preclude the incidence of serious errors and fraudulent manipulation
1048707 To reduce the interval between a transaction and its examination by an independent person not involved in its documentation
1048707 To improve the functioning of the branch leading to up gradation of working of the branch and prevention of fraud
1048707 Compliance with internal control as well as RBIGovernment of India guidelines
1048707 Identification of areasactivities requiring corrective action and urgency
The concurrent auditor is engaged to supplement the efforts of the branch in carrying out simultaneous internal check of transactions and other verifications and compliance with the stipulated procedures laid down In particular it should be seen that -
bull The transactions are properly recordeddocumented and vouched
bull The irregularities are rectified immediately
bull The systems and procedures of the bank are implemented properly
bull The transactions are performed or decisions are taken within the policy parameters stipulated by the Head Office and is not violating the instructions or policy prescriptions of the RBI
bull The delegated authority is exercised and the same is within the terms and conditions of the delegated authority
In very large branches which have separate sections dealing with specific activities concurrent audit is a means by which the branch in-charge can ensure that the different sections function within parameters and procedures
23
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Relationship Between Risks Based Internal Audit and Concurrent Audit
The concurrent auditor does scrutinize the important and vital transaction of the branches having qualitative magnitude of the bankbranch business It facilitates correction of irregularities in least possible period so as to minimize the incidence of errorsirregularities and fraudulent manipulations Whereas in case of the risk based internal audit the focus will shift from the present system of full scale transaction testing to risk identification measuring the risk prioritization of audit area periodicity and allocation of audit resources in accordance with the risk assessment of the bank branches
Scope of concurrent audit
Concurrent audit is an examination which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible It attempts to shorten the interval between a transaction and its examination by an independent person not involved in its documentation There is an emphasis in favour of substantive checking in key areas rather than test checking This audit is essentially a management process integral to the establishment of sound internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations
A concurrent auditor may not sit in judgement of the decisions taken by a branch Manager or an authorized Official This is beyond scope of concerned audit However the audit will necessarily have to see whether the transactions or decisions are within the policy parameters laid down by the Head Office they do not violate the instructions or policy prescriptions of the RBI and that they are within the delegated authority
In very large branches which have different divisions dealing with specific activities concurrent audit is a means to the in-charge of the branch to ensure on an on-going basis that the different divisions function within laid-down parameters and procedures
Before acceptance of assignment of concurrent audit it is necessary for auditor to go through carefully the terms and conditions of audit and scope of the concurrent audit
Scope of Concurrent Audit is very wide like a ocean Expectation of Bank and RBI are very high from chartered accountants It mainly covers following
a General Banking
b Forex
24
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
c Loans and advances
d Compliance
GENERAL BANKING
a CASHb DEPOSITSc KYCAMLd INCOME TAXSERVICE TAXOTHER TAX RELATED ISSUES
GENERAL BANKING- CASH
a) Handling of cash in the branch and cash in transit It mainly covers
i) Surprise physical verification of cash ii) Custody of cash and cash keys iii) Insuranceiv) Clean Note Policyv) Re-Issues bank notes in denomination of Rs 100 and above after checking
authenticityvi) Facility of exchange of mutilatedsoiled notes vii) Use of ultra violet lamps for verification of notesviii) Process of detection and impounding of counterfeit notes ix) Updating cash transactions in computer system without delay particularly
rectification entriesx) Bait Moneyxi) Maintenance of cash records xii) Reversal of entries outstanding in cash in transit accountxiii) Submission of cash related returns to head officexiv) Proper accounting and reporting of inward and outward cash remittances
Movement of cash between branches and currency chests and reporting xv) thereof and movement of cash between branches and business houses
under door step banking facilityxvi) Cash retention limitxvii) Cash receipt in cash collecting machinesxviii) Adherence of other cash processes
b) ATM audit
25
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
i) Surprise physical verification of cash ii) Custody of ATM cash and keys iii) Insurance iv) Retention limit of cash in ATMv) Retention of ATM roles taken from ATM machinesvi) Verification of retained cards in machinevii) Verification of cash packets deposited in Machineviii) Audit of daily statement prepared by branch officials at the time loading of
cashix) RBI license for ATMx) Reconciliation of ATM account in GL with physical cashxi) Maintenance of ATM xii) Reconciliation of account of cash replenishment agency if ATM are being
operated by outsource agency
GENERAL BANKING- DEPOSITS
a) Check the transactions about deposits received and repaid
b) Checking of correct value dating of deposit transactions in the computer system
c) Checking of vouchers passed manually in respect of payment of interest on deposits and deduction of TDS thereon
d) Checking of deduction of penalties on interest in case of premature closure of FDR
e) Checking of conversion of term deposits daily deposits or recurring deposits for reinvestment in term deposits
f) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
g) Interest on Saving Bank Account on Daily product basis
h) Checking of important aspects with regard to interest on depositsi) Senior Citizen interest benefit is not applicable to Non resident
ii) Extra rate of interest to staff
iii) Renewal of overdue FDR
26
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
iv) NRE can only be the joint holder in NRE account
v) Renewal of deposit which are frozen by authorities
i) Activation of inoperative accounts Operation in inoperative accounts and payment of interest on unclaimed and unpaid term deposits
j) Check the modification of details relating to account holders as maintained in the computer system like change of address additiondeletion of name change of signature change in contact details like telephone no
k) Checking of accounts opened for person with Autism Cebral Palsy Mental Retardation and Multiple Disabilities Act 1999
l) Date of deposit in PPF- Clarification by RBI
GENERAL BANKING- KYC AND AML
The objective of KYC guidelines is to prevent the Bank from being used intentionally or otherwise by unscrupulous elements for fraudulent or money laundering activities as enunciated in the Customer Acceptance Policy of the Bank The Guidelines are issued to reinforce the existing checks and controls developed by the Bank and to ensure due diligence while startingextending relationship with a newexisting customer
ldquoKnow Your Customerrdquo guidelines for Retail Liability Resident accounts are revised based on inputs suggestions received from various teams necessary approvals have been taken for the amendments
Checking of guidelines for know your customer (KYC) normsAnti Money Laundering
(AML) Standardscombating of financing of terrorism (CFT) obligation of banks
under PMLA 2002 Illustrative items are given below
a) Verification of account opening forms and compliance of KYC norms
b)c) Checking of new accounts opened particularly current accounts Operation in
new currentSB accounts may be verified for initial periods to see whether there is any unusual operations
d) Check compliance of AML guidelines in connection with foreign currencyTCTravel card purchase and sale
27
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
e) Accepting cash for purchase of bank drafts or pay orders or banker cheque for an amount aggregating Rs50000 or more during any one day (Rule 114 B (i) of Income Tax Act) but as per AML guidelines of RBI no POBank draft for Rs50000 and above cannot be issued by accepting cash
f) Scrutiny of high value cash operations in newly opened account
g) Review of cash transactions for Rs10 lacs and above
h) Review of accounts having abnormal receipts and payments and nature of transactions not commensurate with the nature of account
i) Issuance of AML certificate
28
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Following are the list of documents required for the fulfillment of KYC norms
Table A Core Documents
29
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
1 V a lid P a s s p o r t w ith p h o to amp s ig n a tu re O O O O
2P r in te d R a tio n C a rd w ith p h o to A P H o u s e h o ld c a rd O O O
3 S e n io r C itize n c a rd is s u e d b y S ta te C e n tra l G o v t O O O
4 V o te r ID c a rd O O O
5P A N C a rd is s u e d b y In c o m e ta x d e p t U T IT S L N S D L O O O
6D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O O
7U tility B ills (E le c tr ic ity b ill T e le p h o n e b ill) n o t o ld e r th a n 3 m o n th s O
8
S ta te m e n t o f a c c o u n t w ith A c c o u n t o p e n in g c h e q u e o r P a s s B o o k w ith A c c o u n t o p e n in g c h e q u e o f a s c h e d u le d c o m m e rc ia l b a n k w h ic h A c c o u n t h a s b e e n o p e n e d a tle a s t 3 m o n th s e a r lie r amp A c c o u n t o p e n in g c h e q u e fro m th e s a m e B a n k O
9 D o m ic ile C e r tific a te is s u e d b y S ik k im G o v t O O
10ID c a rd w ith p h o to g ra p h is s u e d b y G o v t o f J a m m u a n d K a s h m ir O O
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Table B Other Documents
30
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
11P e n s io n P a y m e n t o rd e r P a s s b o o k C a rd is s u e d b y S ta te C e n tra l G o v t o f I n d ia O O O O
12A rm s L ic e n s e is s u e d b y S ta te C e n tra l G o v t o f I n d ia a u th o r itie s O O O
13F re e d o m F ig h te rs P a s s is s u e d b y m in is try o f h o m e a ff a ir s G o v t o f I n d ia w ith p h o to O O
14
B a n k P a s s B o o k amp A c c o u n t o p e n in g c h e q u e o f th e s a m e B a n k w ith p h o to g ra p h is s u e d b y S B I a n d its s u b s id ia r ie s o r N a tio n a lis e d B a n k s O O
15P h o to S o c ia l S e c u r ity C a rd (S m a r t C a rd ) is s u e d b y C e n tra lS ta te G o v ts o r U n io n te r r ito r ie s O O
16
P h o to ID c a rd s is s u e d b y fo llo w in g w h ic h h a s a d d re s s o f th e a p p lic a n t C e n tra l o r S ta te G o v tD e p a r tm e n ts C e n tra l o r S ta te G o v tU n d e r ta k in g s P u b lic S e c to r U n d e r ta k in g P u b lic S e c to r B a n k s R B I S E B I E X IM B A N K O O
17
D is c h a rg e b o o k w ith a p p lic a n ts p h o to g ra p h a n d a d d re s s is s u e d b y D e fe n c e S e rv ic e s
O O
18
D e fe n c e D e p e n d a n t C a rd o r D is c h a rg e B o o k is s u e d b y C a n to n m e n t B o a rd o r E x -S e rv ic e m e n C a rd is s u e d b y Z illa S a in ik B o a rd o r o th e r c o m p e te n t a u th o r ity o r P e n s io n P a y m e n t O rd e r B o o k C a rd is s u e d b y C o m m a n d in g O ffi c e r o r o th e r c o m p e te n t a u th o r ity o r S ta tio n h e a d q u a r te rs O O
19 P h o to ID is s u e d b y P S U s to re tire d p e rs o n s O O
20
O r ig in a l le tte r o f in tro d u c tio n amp A c c o u n t o p e n in g c h e q u e fro m e x is tin g b a n k w ith s ig n a tu re amp p h o to o f a p p lic a n t a tte s te d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l o f th e B a n k amp s ig n e d b y B a n k o ffi c e r s ta tin g h is n a m e amp d e s ig n a tio n O O
21E x -s e rv ic e m a n rsquos c a rd is s u e d b y Z illa S a in ik b o a rd s O
22 B a r c o u n c il IM A S r C itize n c a rd O O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
23P IO B o o k le t fo r re tu rn in g N R I s w ith d e ta ils o f C u s to m e r p h o to g ra p h amp v a lid ity m e n tio n e d O O
24
E m p lo y e e Id e n tity c a rd o f C e n tra l S ta te G o v t d e p a r tm e n ts b o d ie s d e fe n s e P u b lic S e c to r U n its B a n k s O
25
Id e n tity c a rd is s u e d b y p ro fe s s io n a l B o d ie s s u c h a s IC A I IC W A I I S C I amp id c a rd s is s u e d to M L A M L C M P b y s ta te amp C e n tra l G o v ts O
26In tro d u c tio n b y B lo o d R e la tiv e d e s ig n a te d B a n k e m p lo y e e h a v in g o p e ra tiv e A c c o u n t O
27
C e r tific a te fro m th e p o s ta l o ffi c e c o n firm in g a d d re s s o f a p p lic a n t e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l a n d s ig n e d b y P o s t m a s te r A s s t P o s t m a s te r O
28
O r ig in a l L e tte r fro m C e n tra l S ta te G iv t d e p ts b o d ie s d e fe n s e d e p t o r P u b lic s e c to r u n its B a n k s E m p lo y e r c e r tify in g th e re s id e n tia l a d d re s s o f a p p lic a n t S ig n a tu re o f th e e m p lo y e e h a s to b e a tte s te d o n th e le tte r O
29
C o n s u m e r g a s c o n n e c tio n c a rd a lo n g w ith re c e ip t fo r g a s s u p p ly n o t o ld e r th a n 3 m o n th s o r w ith d u e e n try fo r g a s s u p p ly O
30
Q u a r te rs a llo tm e n t le tte r is s u e d b y C e n tra lS ta te G o v tD e p ts P S U s R B I S E B I S C B a n k s S ID B I E x im B a n k L e tte r to b e o n th e le tte r h e a d o r u n d e r o ffi c e s e a l w ith s ig n a tu re o f is s u in g a u th o r ity O
31
R e g is te re d L e a v e a n d lic e n s e a g re e m e n t a lo n g w ith u tility b ill n o t o ld e r th a n 3 m o n th s in th e n a m e o f th e la n d lo rd O
32P o s t o ffi c e s a v in g s p a s s b o o k w ith A c c o u n t o p e n in g c h e q u e O
33
D o m ic ile c e r tific a te w ith c o m m u n ic a tio n a d d re s s amp p h o to g ra p h is s u e d b y d is tr ic t c o lle c to r d e p u ty c o m m is s io n e r d is tr ic t m a g is tra te o r e q u a l ra n k o ffi c e r O
34
C e r tific a te b y v illa g e e x te n s io n o ffi c e r v illa g e h e a d o r e q u a l o r h ig h e r ra n k o ffi c e r is s u e d e ith e r o n le tte r h e a d o r u n d e r o ffi c e s e a l amp s ig n a tu re O
S r n o D o c u m e n t ID P ro o fA d d re s s
P ro o fR e la tio n s h ip
D o c u m e n tA g e
p ro o f
35
T ra n s fe r M o v e m e n t o rd e r o r C e r tific a te o n le tte rh e a d o r is s u e d u n d e r o ffi c e s e a l s ta m p amp s ig n e d b y o ffi c e r in c h a rg e o r h e a d o f o ffi c e I s s u e d b y D e fe n c e M in is try o r its u n it n o t o ld e r th a n 6 m o n th s m e n tio n in g n a m e amp a d d re s s o f a p p lic a n t O
36 R e g is te re d T itle D e e d O
37 P ro p e r ty ta x re c e ip t (n o t o ld e r th a n 12 m o n th s ) O
38 W a te r ta x re c e ip t (n o t o ld e r th a n 6 m o n th s ) O
39R a tio n C a rd c o n ta in in g s ig n a tu re amp s ta m p o f o ffi c ia l a u th o r ity O O
40D a te o f B ir th C e r tific a te w h e re in n a m e o f p a re n t is s ta te d O O
41 L ife I n s u ra n c e P o lic y O O
42
S e c o n d a ry S c h o o l L e a v in g C e r tific a te in d ic a tin g d a te o f B ir th (ID p ro o f if d o c u m e n t is w ith a p h o to g ra p h ) O O O
43 M a r r ia g e C e r tific a te O
44L e tte r fro m C o m m a n d in g O ffi c e r o r O ffi c e r -in -c h a rg e o f th e U n it in c a s e o f D e fe n c e P e rs o n n e l O
45 S S L C P U C D e g re e M a rk s C a rd O
46D r iv in g lic e n c e (H a n d w r itte n o r la m in a te d ) is s u e d b y re g io n a l tra n s p o r t a u th o r ity O O
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Note
1) Voter id can be accepted as Address proof if another ID proof from Core document list is provided
2) Driving license can be accepted as Address proof if another ID proof from Core document list is provided
GENERAL BANKING- OPERATIONS AND HOUSEKEEPING
a) Auditing of day to day transactions in systematic manner and passing of vouchers more attention to be given on following issues
i) Vouchers need approval of Branch Manager and Assistant Branch managerii) All expenses vouchers are approved as per DFPiii) All vouchers relating to debit to income iv) Rectification of entries wrongly passedv) Passing of debit entries without feeding cheque number in systemvi) Checking of high value transactions (Cash paymentstransfersclearing
cheques for passing availability of vouchers and debit mandatevii) Passing of paymentcheque in accounts where signature are pending for
scanningviii) Preparation of vouchers
b) Review of compliance of Mitra committee recommendation at branches
c) Custody and movement of branch keys
d) Fixed Assets physical verification
e) Safe custody of Branch Documents Physical verification and audit of branch documents with Branch Document Register Verify availability and quality of documents like death claim cases Issuance of duplicate DDPOFDR checking of indemnities etc
f) Audit of death claim cases documents
31
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
g) Physical verification of Gold Control over saletransfer safe keeping and custody of Gold
h) Physical verification of inventory control over issue of inventory safe keeping and custody of inventory
i) Physical verification of ATM cards and PINS control over issue safe keeping and custody of ATM cards and PINS
j) Audit of all registers maintained at branch like inward and outward registers etc
k) Periodical balancing and reconciliation of all the GL head- on computer and manually
l) Review all balance sheets heads and outstanding entries in accounts Eg Suspense sundry interbranch and interbank accounts Ensure early adjustment of large value entries and follow up
m) Transfer of entries in various balance sheet accounts
n) Reconciliation of accounts with other banks
o) Investments kept at branch on behalf of corporate office
p) Verification of lockers documents and locker operations
i) Physical verification of locker keysii) Audit of locker documentsiii) Stamp duty affixed on locker documentsiv) Exchange of vacant locker keysv) Process of break open of lockersvi) Recovery of overdue locker rentvii) Process of permission of locker operationsviii) Linking of FDR FD as security for locker wait list operation of locker due
diligence un-operated lockers nomination other issuesq) Audit of clearing accounttransactions
i) Obtaining balance confirmation from Bankii) Periodical reconciliation of clearing accountiii) Entries outstanding in reconciliation for reversal and follow upiv) Accounting of difference in clearing account
32
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
v) Delay in debit to party account- ReasonApproval for TODrecovery of income
vi) Verify the complete process of inward and outward clearing along with accounting of inwardoutward clearing cheques bounced
vii) Interestcharges debited by clearing house
r) Verify cheque returnedbills returned and look into reason of return of those instruments
s) Control over tax collections and remittances
t) Audit of Government Business like PFPension etc
u) System Audit (Computer audit) including sharing of passwords
v) Audit of transactions relating to anywhere banking facility provided to account holder in all branches
w) Checking of Demat operations
x) Checking of credit cards operations
y) Compliance of security arrangements at branch
z) Report on scrutiny of staff account
EXECUTION OF AUDIT
a) Staff appointed for audit should have computer knowledge Ask the bank management to provide on site training of computer system One of senior auditor should also attend this training
b) All the activities of the branch should be divided on the basis of risk and audit should be conducted according to risk involved
33
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
c) A check list covering audit program should be provided to audit staff along with of audit to be conducted
d) Go through the appointment letter and audit material provided by bank See the of checking is to be done as per appointment letter and ensure that same is adhered to
e) Query sheet should be given to branch officials on day to dayweekly basis as prescribed
f) Replies of the branch officials should be obtained regularly and updated in draft report
g) Senior chartered accountant partner proprietor should visit branch periodically to discuss the query sheets with branch manager and compliance of the same
h) Efforts should be made for spot rectification It will help in minimizing the incidence of the serious irregularities and fraudulent manipulations
i) Proper records of attendance of staff in the branch should be maintained as required generally by appointment letters
j) Wherever audit has been conducted on sample basis ensure records of sample is documented in working papers files for future
QUALITY OF REPORT
a) Observations in audit report should be specific It should not be like ldquo in some case ldquo or ldquo in few casesrdquo All the remarks should be written with instances
34
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
b) Ensure that in report only those items verified during the month should be confirmed If some areas not covered comment should be given accordingly
c) Wherever audit has been conducted on sample basis same should be disclosed in audit report or sample sheet attached with the audit report
d) Report should be made in the format provided by bank if any
TIMELY SUBMISSION OF AUDIT REPORT
a) Report is not submitted on time purpose of concurrent audit is defeated
b) A draft report can be handed over to branch manager by 4th of subsequent month for his final replies and report can be signed and submitted by 7th or as prescribed in the appointment letter
Types of activities to be covered
(1) The main role of concurrent audit is to supplement the efforts of the bank in carrying out simultaneous internal check of the transactions and other verifications and compliance with the procedures laid down
(2) The scope of concurrent audit should be wide enough to cover certain fraud ndash prone areas like handling of cash deposits safe custody of securities investments overdue bills exercise of discretionary powers sundry and suspense accounts inter-branch reconciliation clearing differences foreign exchange business including Nostro accounts off-balance sheet items like letters of credit and guarantee treasury functions and credit-card business
(3) The detailed scope of the concurrent audit should be clearly and uniformly determined for the Bank as a whole by the Bankrsquos Inspector and Audit Department in consultation with the Bankrsquos Audit Committee of the Board of Directors (ACB)
35
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
(4) In determining the scope importance should be given to checking high-risk transactions having large financial implications as opposed to transactions involving small amounts
(5) While the detailed scope of the concurrent audit may be determined and approved by the ACB some of the suggested items of coverage are given in the
(6) Initiate and operate a system for the appraisal of the performance on concurrent auditors
(7) Ensure that the work of concurrent auditors is properly documented
(8) Be responsible for the follow-up on audit reports and the presentation of the quarterly review to the ACB
Suggested items of coverage
(A) Cash
(i) Daily cash transactions with particular reference to any abnormal receipts and payments
(ii) Proper accounting of inward and outward cash remittances
(iii) Proper accounting of currency chest transactions its prompt reporting to the RBI
(iv) Expenses incurred by cash payment involving sizeable amount
(B) Deposits
(i) Check the transactions about deposits received and repaid
(ii) Percentage check of interest paid on deposits may be made including calculation of interest on large deposits
(iii) Check new accounts opened particularly current accounts Operations in new currentSB accounts may be verified in the initial periods to see whether there are any unusual operations
(C) Advances
(i) Ensure that loans and advances have been sanctioned properly (ie after due scrutiny and at the appropriate level)
(ii) Verify whether the sanctions are in accordance with delegated authority
36
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
(iii) Ensure that securities and documents have been received and properly chargedregistered
(iv) Ensure that post disbursement supervision and follow-up is proper such as receipt of stock statements instalments renewals of limits etc
(v) Verify whether there is any misutilisation of the loans and whether there are instances indicative of diversion of funds
(vi) Check whether the letters of credit issued by the branch are within the delegated power and ensure that they are genuine trade transactions
(vii) Check the bank guarantees issued whether they have been properly worded and recorded in the register of the bank Whether they have been promptly renewed on the due dates
(viii) Ensure proper follow-up of over due bills of exchange
(ix) Verify whether the classification of advances has been done as per RBI guidelines
(x) Verify whether the submission of claims to DICGC and ECGC is in time
(xi) Verify that instances of exceeding delegated powers have been promptly reported to controlling Head Office by the branch and have been got confirmed or ratified at the required level
(xii) Verify the frequency and genuineness of such exercise of authority beyond the delegated powers by the concerned officials
(F) Housekeeping
(i) Ensure that the maintenance and balancing of accounts ledgers and registers including clean cash is proper
(ii) Early reconciliation of entries outstanding in the interbranch and inter bank accounts Suspense Account Sundry Deposits Account DDRR Account Drafts account etc Ensure early adjustment of large value entries
(iii) Carry out a percentage check of calculations of interest discount commission and exchange
(iv) Check whether debits in income account have been permitted by the competent authorities
(v) Check the transactions of staff accounts
37
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
(vi) In cash of difference in clearing there is a tendency to book it in an intermediary suspense account instead of locating the difference Examine the day book to verify as to how the differences in clearing have been adjusted Such instances should be reported to Head Office in cash the difference persists
(vii) Detection amp prevention of revenue leakages through close examination of income and expenditure persists
(viii) Check cheques returnedbills returned register and look into reasons for return of those instruments
(ix) Checking of inward and outward remittances (DDs MTs and TTs)
(G) Other items
(i) In case the branch has been entrusted with government business ensure that the transactions are done in accordance with the instructions issued by Government RBI amp HO
(ii) Ensure that the branch gives proper compliance to the internal inspectionaudit reports
(iii) Ensure the customersrsquo complaints are dealt with promptly
(iv) Verification of statements HO returns statutory returns
38
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
COMPANY PROFILE
39
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
ICICI BANK PROFILE
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany
ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the
40
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
Corporate Profile
ICICI Bank is Indias second-largest bank with total assets of Rs 363400 billion (US$ 81 billion) at March 31 2010 and profit after tax Rs 4025 billion (US$ 896 million) for the year ended March 31 2010 The Bank has a network of 2529 branches and about 6102 ATMs in India and has a presence in 19 countries including India
ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised
subsidiaries in the areas of investment banking life and non-life insurance venture capital and asset management
The Bank currently has subsidiaries in the United Kingdom Russia and Canada branches in United States Singapore Bahrain Hong Kong Sri Lanka Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates China South Africa Bangladesh Thailand Malaysia and Indonesia Our UK subsidiary has established branches in Belgium and Germany ICICI Banks equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE)
BOARD MEMBERS
The ICICI Bankrsquos board comprises reputed people from the finance industry both from India and Abroad
1 Mr K V Kamath Chairman
2 Mr Sridar Iyengar
3 Mr Homi R Khusrokhan
4 Dr Anup K Pujari
5 Mr MS Ramachandran
6 Dr Tushaar Shah
41
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
7 Mr V Sridar
8 Mr V Prem Watsa
9 Ms Chanda D Kochhar Managing Director amp CEO
10 Mr N S Kannan Executive Director amp CFO
11 Mr K Ramkumar Executive Director
12 Mr Rajiv Sabharwal Executive Director
ICICI BANK - REGIONAL PROCESSING CENTRE
RPC is Regional Processing center It is back office for ICICI bank Such a place which is very useful for ICICI bank RPC has different departments like
AOT Transaction and Clearing Document Verification Unit (DVU) Risk Containment Unit (RCU) Expenses etc
In RPC employees are working for branches All the works are forwarded from branches to RPC So for RPCs branches are their customers And employees of RPCs solve the issues of branches It is really helpful to branches and customers RPC is such a beautiful place in which all the employees are working as a family ICICI Bank lsquos RPCrsquos are situated at every state That means in every state there is atleast one RPC of ICICI Bank All the branches in the state report to the RPC There every day at least 2000 AOF comes This includes savings form current account open Forms web trade Modification etc
We can say that for ICICI Bank all the branches are the compartments and the RPC is the engine
42
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
VISION
To make ICICI Bank the dominant player built on trust by world-class people and service This can be achieved by
Understanding the needs of customers and offering them superior products and service
Leveraging technology to service customers quickly efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer Sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees
DINESH K YADAV amp ASSOCIATES ndash PROFILE
Dinesh K Yadav amp Associates was established around 3 years back in May 2008 by a young dedicated visionary Mr Dinesh K Yadav and has since been providing a wide array of Accounting Auditing Taxation Assurance and Business Advisory
For over 3 years which is of course not a long time their specialized team of accountants are entrusted to provide a comprehensive range of Assurance amp Taxation services and Corporate Advice to the clients in all over Bihar and Jharkhand Dinesh K Yadav amp Associates retains professionally qualified and well experienced personnel who are supplemented with special training in one or more areas to add value to the organization
Dinesh K Yadav amp Associates is a Chartered Accountancy Firm that constantly working at providing their clients with Assurance amp Taxation services in the best possible manner
Currently Dinesh K Yadav amp Associates have spread their business over Patna and Jamshedpur His Partner Mr Dayashankar who looks after the business over Jamshedpur and under whose guidance this project has been made always believes in quality and not quantity
43
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Mission Statement
Dinesh K Yadav amp Associates has committed their experience and skills to provide high quality professional services to the clients with the commitment to the highest standards of ethics and integrity
Vision
ldquoTo be one of Indiarsquos leading Professional services firm and to provide maximum value to its clients
Mission
To be best in class multifaceted accounting firm bounded by Code of Ethics delivering clients best affordable services with assurance of professional integrity
Integrity
We are committed to integrity in our efforts in our commitments to clients and our people and in our conduct provide high quality professional services to the clients We believe that the role of all our partners and our people is to build the firm while we are a part of it and to leave behind an organization that is stronger and better than when we entered it
Team
The firm has 2 (both are Chartered Accountants) and around 25 staff members which includes more than 15 concurrent auditors supported by specialized experts in different areas The professionals working for the firms are highly trained experienced and have in depth knowledge of accounting and auditing pronouncements
44
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
ANALYSIS OFDATA
45
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
1 ORGANISING THE DATA
The data collected during data collection process are organized and presented in a
comprehensible sequence to make them more meaningful
2 PRESENTATION OF DATA
After the data has been properly organized it is ready for presentation There are
different modes of presentation like tables charts etc The main objectives of presentation
are to put collected data into an easy readable form
3 ANALYSIS OF DATA
After organizing and presenting the data the researchers then have to proceed towards
conclusion by logical inferences The raw data is then analyzed
middot By bringing raw data to measured data
middot Summarizing the data
4 INTERPRETATION
Interpretation means to bring out meaning of data or to convert mere data into
46
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
information From the analysis of data the various conclusions are find out on the basis of logical inferences
5 CLASSIFICATION OF DATA
If refers to the process of arranging data into homogenous classes Subsequent to the
collection of data the results were sorted out and arranged in different categories like
Graph Table etc
No of AOFs
SavingsCurrentWeb tradeOthers
1 Interpretation The above data shows that out of 2000 AOFs that come to RPC every day 40 covers the savings account25 current account15 web trade account and 20 others
47
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Wrong Documenta-tion
Critical KYC Error Others0
5
10
15
20
25
30
35
40
45
ERRORS
ERRORS
2 Interpretation The above data shows that out of 400 samples of AOFs the most of the errors are ndash 40 for wrong documentation
48
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
15 are critical cases 15 are KYC errors and rest 30 are other types of errors
RESULTS AND
49
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
FINDINGS
FINDINGS
The primary focus of concurrent audit is to provide reasonable assurance to the Board and top management about the adequacy and effectiveness of the audit conducted and control framework in the banks operations While examining the effectiveness of control framework the concurrent audit should report on proper recording and reporting of major exceptions and excesses Transaction testing would continue to remain an essential aspect of concurrent audit The extent of transaction testing will have to be determined based on the risk assessment
Also from the 100 samples taken from each types of accounts specially savings accounts we found that small errors are almost pertinent in nature be it signature mismatch id mismatch wrong address proof etc Therefore proper handling and thorough inspection of these forms are usually done by the concurrent auditors
50
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Here AOFs are being scrutinized by the Document Verification Unit that looks after the authenticity of the documents given along with the AOFs Similarly the Risk Containment Unit looks after the risks involved with the AOFs and actions that are to be taken as per the situation Working at the RPC is all about team effort where one mistake of a particular unit affects the accuracy of other department So proper coordination and team work along with time pressure is very important
CONCLUSION
51
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
CONCLUSION
A sound concurrent audit plays an important role in contributing to the effectiveness of the banking system The audit function should provide high quality counsel to management on the effectiveness of concurrent audit and internal controls including regulatory compliance by the Bank Historically the concurrent audit in banks has been concentrating on transaction testing testing of accuracy and reliability of accounting records and financial reports integrity reliability and timeliness of control reports and adherence to legal and regulatory requirements However in the changing scenario such testing by itself would not be sufficient There is a need for widening as well as redirecting the scope of audit to evaluate the adequacy and effectiveness of banking procedures and internal control systems in the banks
52
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
RECOMMENDATIONS53
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
ANDSUGGESTIONS
SUGGESTIONS
For effective concurrent audit it is essential that the audit program is detail and preplanned Since the period during which the concurrent auditor is to conduct checking of manifold items in the branch of the Bank is limited and transactions are numerous rationing of the time of the concurrent auditor is a pre-condition to successful audit The checklist is to be time oriented with volume of transaction and vulnerability of the same being considered for ascertaining frequency of checking An auditor should also check
1 KYC Norms compliance by bank
2 NPA
3 Physical cash verification
4 Physical Stationery verification and security measures applied by bank for stationery items
5 Cash retention limit of the branch and if cash is exceeding that limit branch should report to HORO
54
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
6 During the month new CCODSBCurrent account opened
7 Very important- documentation of these above opened accounts for CCOD documents should be as per sanctioned letter (strictly)
8 Monthly Stock statement in case of CCOD account
These are few broad areas which an auditor must check Also find out which are major CCOD Accounts of that Bank(which one can find from closing balances)or an auditor can ask the concerned person in bank handling ccod facilities
1 One of the condition is to submit last audited balance sheet Tally the stock shown in audited balance sheet vis-a-vis average stock shown during monthly stock statement
2 Newly opened savingscurrent accounts documents taken thereof 3 Learn How interest is calculated on savings and fd int 4 Find out How and who maintains cheque returns RegisterRecordWhether
charges are collected for such cheque Return Transactions 5 cash should be checked by senior most person once in a month 6 other facility like fire extinguisher alarm system hidden camera securities all
these to be seen If any major deficiency u can surely reportBecause proper security of cash is main purpose
55
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
LIMITATIONS OF THE STUDY
LIMITATIONS OF THE STUDY
Shortage of time- The main limitation I come across is shortage of time I have short time to collect data and analyze the problem and come to the solution
56
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
Secondary data analyzed could not be presented as it was not allowed by the bank
Since the study is wide in nature and canrsquot be taken for consideration-
The study is big in nature and data collected is only from Jamshedpur RPC
so it canrsquot be taken into consideration for whole ICICI bank and its
branches
People were reluctant to join or get transferred to RPC as the workload in RPC is very hectic
57
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
BIBLIOGRAPHY
BIBLIOGRAPHY
BOOKS-
1) Auditing ndash V K Agarwal
2) Marketing Research DD Sharma
58
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
3) Marketing Management Philip Kotler
4) Bank Management - Vaishanav
MAGAZINES-
1) Annual Report of the Company
2) Journals amp Catalogues of the company
WEB-
1) wwwicicibankcom
2) wwwfinancialexpresscom
3) wwwauditguidecom
4) wwwcalclubcom
5) wwwgooglecom
6) wwwconcurrentcom
7) wwwindiacorecom
59
THANK YOU
60
61
THANK YOU
60
61
61
Recommended